Scotch Whisky Case Highlights Importance of Brand Strategy, Says MMS

Breaking into overseas markets and new jurisdictions will have various implications on an organisation’s trademarks and branding. With that in mind, businesses should be considering their brand strategy from an early stage.

UK-registered trade marks only protect branding within the UK market. Businesses with plans to make their products or services available in a foreign jurisdiction should consider the options available for registering trade marks in foreign territories.

Businesses targeting European markets should consider applying for a Community Trade Mark, which grants registered trade mark protection across Europe. There are also options available for registering trade marks in jurisdictions further afield, such as China and the United States.

Registering trade marks in foreign jurisdictions strengthens the position of a business seeking to prevent third parties from using its branding without permission when providing similar services. If branding is not registered as a trade mark, it can be an expensive process to prevent a third party from misusing it, as it would be necessary to rely on the law of passing-off, which can be a more expensive and less clear-cut option.

The Scotch Whisky case

The SWA has registered trade marks in a number of foreign jurisdictions, including China, to safeguard the reputation of the term ‘Scotch Whisky’. This means that only genuine Scottish-produced whisky products may be labelled as Scotch Whisky.

The SWA became aware of infringement by a Chinese manufacturer and brought a successful infringement action in that country. Obtaining a court order preventing a Chinese manufacturer from producing bottle caps bearing its trademark, the SWA was also awarded damages.

By registering a trademark in China, it was relatively straightforward for the SWA to bring an action against the Chinese-based infringer. Other potential infringers in China are likely to be dissuaded from using the trademark without permission for fear of being sued for significant damages.

Stopping the infringement early

The SWA case serves to highlight the importance of taking action at an early stage. The SWA brought action against the manufacturer of the bottle caps before they had been attached to the bottles containing non-Scotch whisky. This allowed it to prevent distribution of bottles of non-Scotch whisky bearing the trademark. It becomes more difficult to contain infringement once infringing products are in circulation or once services are being provided under the allegedly infringing branding, as is often the case.

It is, therefore, important that organisations monitor and enforce their registered trademarks in those foreign territories that are relevant to their business. Failing to take steps to enforce a registered trademark may lead to protection being lost.

The outcome of the SWA’s action should be encouraging for businesses with plans to expand the use of their brands in foreign jurisdictions, and it underlines the importance of registering trademarks in territories where expansion is planned. Businesses should consider their branding strategy at the same time as reviewing their growth plans, in order to ensure that the options for registering trademarks are identified early within the targeted markets.

Ross Nicol is a Partner in the IP & Technology team at Maclay Murray & Spens LLP.